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The Origin Of Financial Crises: Central Banks, Credit Bubbles, And The Efficient Market Fallacy (2008)

by George Cooper(Favorite Author)

4 of 5 Votes: 1

ISBN

0307473457 (ISBN13: 9780307473455)

languge

English

genre

History & Biography

publisher

Vintage

review 1: I enjoyed the hell out of this book. The first half plodded on for a bit, but once I got into the second half, everything "clicked", and the author's main thesis became intuitively obvious. I was so excited that I proceeded to go back and re-read the first half again to make sure I hadn't missed anything. In a nutshell, the self-correcting nature of prices that lead to market stability for most goods actually works in reverse for securities, and leads to overcorrections in securities markets, which bring about bubbles and crashes. If you're still an advocate of Efficient Market Theory after reading this book, then you probably didn't understand what you read.
review 2: Critical examination of the “efficient market” theoryAnalyst George Cooper’s book s... moreeems to prioritize passionate (although informed and understandable) advocacy over a strictly reportorial explanation of economic ideas. He clarifies his belief that much of the present fiscal misery flows from decades of unwarranted confidence in the “Efficient Market Hypothesis.” He offers the work of 1970s American economist Hyman Minsky, 19th century physicist James Clerk Maxwell and the inventor of fractal geometry Benoit Mandelbrot, to support his claim that experts could detect, govern and manage economic bubbles before they pop. He also recommends a dose of inflation plus governmental controls on credit creation to fix the economic system. He summarizes Minsky, uses Maxwell’s work on steam engine governors as a metaphor for managing credit creation and applies Mandelbrot’s observation of a memory effect to the economy. Even though his presentation of the efficient markets fallacy seems oversimplified in parts, his theory is interesting. getAbstract recommends Cooper’s background research on fiscal policy ideas, if not on every facet of fiscal events. The more government controls you favor, the more likely you are to be persuaded by his passion. less

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